President Signs UI Benefits Extension Legislation

U I Forum
A publication of ADP Unemployment Group
®
SUMMER 2008, VOLUME 14, ISSUE 3
President Signs UI Benefits
Extension Legislation
On June 30, 2008, President Bush signed HR 2642, the Supplemental Appropriations Act into law. The bill includes provisions for Emergency Unemployment
Compensation (EUC), a temporary federal extension of unemployment insurance
(UI) benefits. Highlights of the bill are as follows:
• In all states, up to 13 weeks of federal emergency UI benefits are available
to individuals who have exhausted regular state benefits.
• Individuals must have had 20 weeks of full-time insured employment
or the equivalent in insured wages.
• Eligibility extends to persons who exhaust regular state UI benefits on or
after May 1, 2007 through March 31, 2009.
• All EUC payments will cease after June 30, 2009.
• Appropriations totaling $110 million are available to assist states with
increased claims workload costs.
The enacted legislation does not include language contained in previous bill versions that would have provided for a second 13-week extension of UI benefits in
states with an unemployment rate of 6% of higher.
The Congressional Budget Office projects the overall cost of the federal UI extension to be $8.2 billion over the next 10 years.
Although each state’s laws currently contain provisions for federal-state extended
benefits under the regular UI program, unemployment rates have not generally
reached required levels for it to trigger on, despite lagging economic conditions.
Government leaders believe the temporary federal extension provided by HR
2642 will address the needs of unemployed workers who have exhausted
regular benefits. ~
IN THIS ISSUE:
President Signs UI Benefits
Extension Legislation . . . . . . . . . . . . . . .1
UI Agencies Savvy to Pretexting
Schemes . . . . . . . . . . . . . . . . . . . . . . . 2
Employers Play Important Role In
Preventing UI Imposter Fraud. . . . . . . 2
State Updates . . . . . . . . . . . . . . . . . 3
Worker Classification: Increasing
Scrutiny for UI Purposes . . . . . . . . . . 3
This newsletter is published quarterly
and is intended to present timely and
noteworthy articles on unemployment.
Because individual state regulations
differ, please direct any questions or
suggestions you may have to:
ADP UNEMPLOYMENT GROUP
P.O. Box 66744
St. Louis, MO 63166-6744
Phone: 888.805.5142
Fax: 877.829.0804
UI FORUM®
2
UI Agencies Savvy to Pretexting Schemes
In the course of administering unemployment insurance (UI) programs, state agencies must obtain and utilize personal information.
At recent national UI conferences sponsored by the National
Association of State Workforce Agencies (NASWA), special attention was focused on the need to secure confidential information
and, in particular, on a new scheme unscrupulous persons are
using to attempt to fraudulently obtain such information from UI
agencies called “pretexting.”
Pretexting is the act, usually by telephone, of obtaining, by deception, protected information from a “target.” Callers are seeking a
variety of personal, confidential information such as names, social
security numbers, employer names, addresses, wage data, etc. This
information may then be sold or used to commit identity theft.
An elaborate pretexting scheme was described recently at a UI
conference. The scam was first identified when alert Colorado
state agency workers discovered numerous calls from the same
telephone numbers to the agency call center. The information was
shared with other state agency fraud detection workers who found
similar call patterns in their states. Through further investigation,
cooperating government agencies found physical locations of an
established pretexting “business,” complete with cubicles and
employees wearing shirts with a company logo, where calls had
been generated to all 50 state workforce agencies, the IRS, the
Social Security Administration, the Department of Defense,
banks, hospitals and other public and private entities.
Pretexting callers use a variety of scripted story-lines when contacting government agencies. They can be persuasive, disarming,
ingratiating, friendly and manipulative in their pursuit to obtain
personal information. For example, a pretexter might state his/her
employer “messed up everything” by reporting wages to the wrong
state, and the claim cannot be paid until it gets fixed, so he/she just
needs to know what wages were reported. Callers use many other
scenarios to try and obtain personal information – everything
from claiming to be a person with amnesia due to a recent accident
to being a person in the FBI witness protection program.
Some of the techniques and tools state employees, including UI
agency staff, are using to guard against pretexters include:
• Controlling calls by not volunteering more information
than the caller has verified,
• Utilizing lists of known or suspected pretexter
phone numbers,
• Being alert to callers who “fish” for specific information
without providing confirmation of identity,
• Being aware that genuine UI claimants provide
information, while pretexters want information, and,
• Questioning callers in-depth.
Pretexting will continue to be a nationwide problem as long as
skilled abusers are able to “sweet talk” their way to valuable personal data. UI agencies recognize the potential vulnerability of the
information they hold and are taking great care in authenticating
callers before releasing any data. ~
Employers Play Important Role In Preventing UI Imposter Fraud
Employers are likely familiar with the topic of individual identity theft, but Unemployment Insurance
(UI) “imposter” fraud may be a lesser-known subject. Imposter fraud occurs when compromised personal information is used by others to file unemployment claims and collect benefits. State UI agencies
are taking measures to halt fraudulent claims, but offer a few tips to employers on how they can be a helpful partner in preventing UI imposter fraud.
•
•
•
•
Verify social security numbers (SSN) with the Social Security Administration at the time
workers are hired. Information on verification options, including on-line, batch file, phone
and paper verifications can be found at http://www.ssa.gov/employer/ssnvadditional.htm.
Protect workers by using an alternative identifier to the SSN, whenever possible, with regard
to correspondence and records.
Maintain detailed employment records in order to respond to UI agency notices.
Destroy old records containing workers’ personal information via controlled methods,
i.e., shredding or erasing. ~
Summer 2008
3
State Updates
AK: Regular federal-state extended benefits triggered on as of
May 25, 2008. The extended benefit period for individuals
exhausting their regular UI claims will begin on June 1, 2008.
Exhaustees qualify for an amount of extended benefits equal to
50% of their maximum regular benefit entitlement, including
dependents' allowance – up to 13 weeks. Extended benefits are
funded 50% by the federal government and 50% by the state.
Alaska experience-rated employers’ tax rates are not affected by
these benefits; however, those employers who reimburse the fund
will be responsible to repay such benefits charged to their
accounts.
IA: Governor Culver signed into law Senate File (SF) 2160, effective July 1, 2008, which raises the bar for IA employers to give
timely and complete information in the initial fact-finding process
for determination of a person’s unemployment insurance eligibility. The new law also puts added pressure upon employer representatives to participate fully in the process or risk being denied
permission to represent employers in the state. The agency will
engage in administrative rule-making to define the essential elements required for compliance with the new law.
Also, the minimum and maximum weekly unemployment benefit
amounts increased effective July 6, 2008 as follows: zero depend-
ents – the minimum is $53 and the maximum is $361; one
dependent - the minimum is $56 and the maximum is $375; two
dependents – the minimum is $59 and the maximum is $389;
three dependents – the minimum is $62 and the maximum is
$409; four or more dependents – the minimum is $65 and the
maximum is $443.
ME: Effective for new claims filed on or after June 1, 2008, the
maximum unemployment insurance weekly benefit amount
(WBA) without dependents increased to $344. With dependents
allowance of 50% of the amount of the WBA, the maximum
amount is $516. The minimum WBA remains $57 and, with
dependents allowance, $85.
TX: The Texas Workforce Commission (TWC) is refunding
$148 million to nearly 360,000 Texas employers. To qualify for a
refund, an employer must be experience-rated (i.e., in business
with payroll for at least 18-months before October 1, 2007),
must have had payroll in 2008 and paid all taxes due. The TWC
collects unemployment insurance (UI) taxes from subject
employers for payment of UI benefits. Texas law requires the
TWC to return excess funds to employers. The current Trust
Fund balance is $1.7 billion, approximately $738 million above
the minimum level required. ~
Worker Classification: Increasing Scrutiny for UI Purposes
In recent years, the employer-employee relationship in the United
States has undergone a remarkable evolution, due to things like
competition in a global marketplace, the emergence of temporary
staffing companies and professional employer organizations, and
growing numbers of part-time workers. These changes present
special challenges for the unemployment insurance (UI) system,
which for seven decades has largely defined labor force attachment
to work as full time employment with a single employer. Not to
be excluded from the many employment relationship changes is
the “independent contractor,” a term that defies a simple definition. While some view independent contractor arrangements as a
positive new way for business to be conducted, others see it as a
way for employers to avoid certain obligations regarding workers.
Not surprisingly, worker classification, especially independent contractors, is fast becoming the target of scrutiny by the Internal
Revenue Service, the U.S. Department of Labor and state UI agencies through a shared initiative known as “Questionable Employment Tax Practices” (QETP).
QETP is a coordinated auditing effort between state and federal
agencies to identify employers looking to avoid employment tax
obligations, including UI coverage. Improperly classifying employees as independent contractors is an area of investigation under
the QETP initiative. So what distinguishes employee status from
independent contractor status?
Federal law dictates what is considered to be “covered” employment for UI purposes. UI coverage for workers in the United
States is nearly universal, extending to about 97% of all wage and
salary workers. State UI laws must conform to the federal requirements in order for employers in a state to qualify for full FUTA tax
credit (Federal Unemployment Tax Act). Within the scope of federal standards, however, states have some latitude in defining criteria used to determine the existence of an employer-employee relationship or that of an independent contractor. Most state UI laws
include a broad definition in determining the existence of an
employment relationship. Generally, “service for remuneration” is
considered employment unless it meets each of three tests—often
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UI FORUM®
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. . . continued from page 3
referred to as the “ABC” test. These are: (A) freedom of
the individual from direction and control over the performance of the work; (B) performance of service outside
the usual course of the business, or outside of all places of
such business; and, (C) customary engagement of the individual in an independently established trade, occupation,
profession or business. Some states use one or two of the
“ABC” factors. Several states apply a common law relationship test, while others apply various statutory criteria
or determinants to evaluate the relationship.
Although the ABC factors are often susceptible to subjective interpretation, UI agencies believe there are instances
where an employer may treat workers as independent contractors, either knowing or suspecting the ABC criteria are
not met, in order to avoid paying associated “employee”
costs. The QETP initiative helps ensure compliance with
the UI statutes relating to proper worker classification, in
order to stem fraud and tax evasion, as well as provide
access to UI benefits to qualified workers. ~
Save The Date
UWC just announced the 2009
National UI Issues Conference will
be held May 12-14, 2009, at the
Hilton Wilmington Riverside Hotel
in Wilmington, North Carolina.
Please keep the date in mind,
when planning schedules and
budgets for next year. ~
THE U.I. FORUM® IS PUBLISHED BY ADP UNEMPLOYMENT GROUP, P.O. BOX 66744, ST. LOUIS, MO. 63166.
©ADP, INC. 2007. ALL RIGHTS RESERVED
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